The euro area’s economic performance over the past few years has been an almost unmitigated disaster, largely caused by unforced policy errors. And things could get a lot worse if the focus remains on threats to force the rest of the currency bloc to look like Germany. Yet we would be remiss if we ignored some mildly encouraging data that’s emerged in the past 12 months.

Start with the composition of growth in output and household incomes across the single currency. Via CreditSights: Read more

Space. The final frontier. We look out into it to seek out new life and new civilizations so that we can boldly go where no man has gone before. But also to overcome the unsettling feeling that we might be all alone in the cosmos.

So what do we do to overcome this angst? We develop high-grade instruments to peer ever deeper into the universe. We do this to try to make sense of the vast big black expanse. To see into the darkness. To extract meaning from the data.

Cardiff writes mostly about US macroeconomic issues, with daily excursions into other topics about which he claim no expertise. Before Alphaville, Cardiff spent a little more than two years as a reporter at Dow Jones Financial News covering investment banking, asset management, and private equity. Along the way he has written freelance pieces on a variety of other topics from behavioural psychology to Muay Thai, the latter also being a personal interest that involves frequently getting kicked in the shins (and torso, and head).

Pragmatic sentences about the Chinese slowdown are often in short supply, so…

In our view, the worst thing about China’s slowdown is not the risk of some kind of cataclysmic economic meltdown or financial crisis but that – in sector after sector – the investable ways to “play” China shrink to the local names on the right side.

You see, the only way financial technology can drive financial inclusion is by de-risking people who would otherwise be too risky to lend to, who can’t be trusted to use funds allocated to them productively and who certainly can’t afford the extortionate rates which would make it worth lending to them. Read more

If you had asked us last week which American presidential candidate would be the first to use terminology devised by the Basel Committee for Banking Supervision in an intelligent discussion of the importance of higher capital requirements for the big banks, we probably wouldn’t have guessed that it would be Rick Perry, the former governor of Texas.

After all, this was the man who, despite a 14-year record as the executive of America’s second-largest state, is best known in the rest of the country for a gaffe. Yet the discussion of GSIB surcharges was just part of a detailed speech he gave on Wednesday at the Yale Club of New York, which we attended. Afterwards, we also had a chance to talk with Avik Roy, one of Perry’s senior policy advisers. (Roy had invited us.)

While there were certain ideas that struck us as potentially contradictory, the general thrust was promising. In fact, it’s possible Perry has outlined the most coherent and sensible financial regulatory agenda of any of the candidates so far. Read more

On another big day of banks reporting, Lloyds has announced a substantial rise in profits, but also recorded yet another large PPI charge. FT Opening Quote, with commentary today by deputy head of Lex Oliver Ralph, is your early City briefing. You can sign up for the full newsletter here.Read more

Speaking before the investigation [into Avic Heibao, a listed manufacturing subsidiary of Mr Lin's company Avic, by the securities regulator on suspicion of illegal and irregular share transactions] was revealed, Mr Lin cast his company’s actions as part of a heroic struggle against foreign aggression.

“This stock disaster was a premeditated plot, a well-prepared case of malicious short selling and part of a powerful, tumultuous economic war launched against China,” Mr Lin said in an interview with state media. “The war launched against [the Chinese stock market] is an attack on the five-starred red [Chinese national] flag.”

In an editorial he penned for a state-run nationalist newspaper, Mr Lin also blamed US plots for the problems in the Japanese economy in the early 1990s and for the 1997 Asian financial crisis.

… and more down to distortions in China’s own markets. Now, particularly, those distortions introduced by China’s powers-that-be while trying to put a floor under the slide and target a level of 4,500 for the index, using a raft of measures. Read more

What is imagination? How does it work? And what role does it play in consciousness?

Cognitive scientists have long hypothesised that imagination equals a “mental workspace” within which information can be processed across specialised subdomains. In other words, it’s a place where the brain can simulate the physical world around it and manipulate that simulation according to new variables to anticipate future scenarios. What’s always been a mystery, however, is how the mind knows what rules to use when manipulating that simulation.

Only 20 per cent or so of investors polled by BofAML thought that Chinese growth was even approaching the official 7 per cent, ignoring the National Stats bureau’s claims that the figures for Q2 growth “objectively reflect the real situation.” Read more

It’s a Super Thursday of company results both in the UK and on the continent, so probably a good day to release bad corporate news in this deluge. FT Opening Quote, with commentary this week by deputy head of Lex Oliver Ralph, is your early City briefing. You can sign up for the full newsletter here.Read more

Climate campaigners have popularised the notion that fossil fuel assets might one day become “stranded” because, if global warming is to stay within the internationally agreed two degree Celsius limit, they can’t realistically be burned.

It’s a view that has gained a lot of traction with investment managers leading to growing debates about strategies to de-risk portfolios by way of active engagement at the shareholder level or outright divestment. Read more

The chart on the right shows the price changes of the Shanghai composite stock index since the beginning of 2014 and the one on the left shows the price changes of a different stock index, decades earlier, that appears to have behaved very similarly, albeit with a bigger boom over a slightly longer time frame. We removed the labels and time scales to heighten their similarities, and normalised both to start at 100.

In both cases there was a period when basically nothing happened to stocks, followed by an extreme appreciation, followed by a sharp drawdown of about one-third.

Barclays has beaten expectations, but it still needs to show more of the acceleration it promised after removing CEO Antony Jenkins. FT Opening Quote, with commentary this week by deputy head of Lex Oliver Ralph, is your early City briefing. You can sign up for the full newsletter here.Read more

Fascinating discussion here from the Bank of England’s Andy Haldane on the stresses and strains facing shareholder-controlled corporate entities pretty much everywhere.

A quick taste:

These criticisms have deep micro-economic roots and thick macro-economic branches. Some incremental change is occurring to trim these branches. But it may be time for a more fundamental re-rooting of company law if we are to tackle these problems at source. The stakes – for companies, the economy and wider society – could scarcely be higher.

Chinese equity markets are nuts. And the search for a narrative to explain this week’s moves is becoming ever nuttier. As Deutsche said: “It ceased to be a free market a long time ago so analysing it is tough”. Read more